Penalty on removed capital goods sustained where Section 11AC and Rule 173Q were both operative at the relevant time.

Duty on removed capital goods was treated as undisputed, and a vague plea of "human error" was found insufficient to show bona fide non-payment. The commentary states that Section 11AC was already in force when the removal occurred, and that both Section 11AC and Rule 173Q were then operative. On that basis, penalty could be sustained under either provision, and no apportionment between the two penalty provisions was required. The challenge to the demand and penalty was therefore rejected.

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Issues: Whether the duty demand on removed capital goods was sustainable and whether the penalty imposed under Section 11AC of the Central Excise Act and Rule 173Q of the Central Excise Rules could be interfered with on the grounds that Section 11AC was not in force and that the penalty was not apportioned between the two provisions.

Analysis: The duty liability on the capital goods removed from the factory was not disputed. The explanation of "human error" was found too vague and unsupported to establish any bona fide failure to pay duty. The removal of the goods took place in August 1997, by which time Section 11AC was already in force. The authorities also found that both Section 11AC and Rule 173Q were then operative, so penalty could lawfully be sustained under either provision. In such circumstances, the question of apportionment of penalty did not arise.

Conclusion: The penalty was validly imposed and no interference was called for.

Final Conclusion: The challenge to the demand and penalty failed, and the appeal was dismissed.

Ratio Decidendi: Where both the substantive penalty provision and the rule-based penalty provision are in force at the relevant time, a penalty imposed under either provision is sustainable without apportionment, and a vague plea of human error does not establish bona fide non-payment of duty.

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